Triple Tops and Bottoms Price Patterns
Most
of the points covered in the treatment of the head and
shoulders pattern are also applicable to other types of
reversal patterns. The triple top or bottom, which is
much rarer in occurrence, is just a slight variation of
that pattern. The main difference is that the three
peaks or troughs in the triple top or bottom are at
about the same level. Chartists often disagree as to
whether a reversal pattern is a head and shoulders or a
triple top. The argument is academic, because both
patterns imply the exact same thing.
The
volume tends to decline with each successive peak at the
top and should increase at the breakdown point. The
triple top is not complete until support levels along
both of the intervening lows have been broken.
Conversely, prices must close through the two
intervening peaks at the bottom to complete a triple
bottom. (As an alternate strategy, the breaking of the
nearest peak or trough can also be used as a reversal
signal.) Heavy upside volume on the completion of the
bottom is also essential.
The
measuring implication is also similar to the head
and shoulders, and is based on ,the height of the
pattern. Prices will usually move a minimum distance
from the breakout point at least equal to the height
of the pattern. Once the breakout occurs, a return
move to the breakout point is not unusual. Because
the triple top or bottom represents only a minor
variation of the head and shoulders pattern, we
won't say much more about it here.
Triple Tops and Bottoms Price
Patterns